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Question

During the month of January, the standard cost of actual hours worked amounted to Rs.42,000, the standard hours allowed for actual production were 2,000 and the direct labor efficiency variance amounted to Rs.2,000 unfavorable. What will be the standard direct labor rate per hour?

A Rs.22 per hour Correct Answer Incorrect Answer
B Rs.20 per hour Correct Answer Incorrect Answer
C Rs.21 per hour Correct Answer Incorrect Answer
D Rs.10.5 per hour Correct Answer Incorrect Answer
E Rs.12 per hour Correct Answer Incorrect Answer

Solution

Direct labor efficiency variance = (AH × SR) – (SH × SR) Rs.2,000 = Rs.42,000 – (2,000 × SR) Rs.2,000 – Rs.42,000 = -2,000SR -Rs.40,000 = -2,000SR SR = Rs.40,000/2,000 SR = Rs.20 per hour

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